Supporting local, legal businesses just got a little cheaper for California cannabis users.
Gov. Gavin Newsom signed an assembly bill on Monday, lowering the taxes on legally sold cannabis products, a move aimed at combating the illicit market.
Assemblymember Matt Haney (D-San Francisco), who sponsored the bill, AB 564, said it will help “level the playing field.”
“California’s cannabis economy can bring enormous benefits to our state, but only if our legal industry is given a fair chance to compete against the untaxed and unregulated illegal market,” Haney said in a statement on Newsom’s website.
The legislation stopped a pending tax increase on the recreational drug and rolled back the excise tax rate to 15%, which was recently raised to 19% in July. The excise tax is imposed on cannabis, tobacco and alcohol, among other products, and is one of three taxes imposed on the products, along with sales taxes and city taxes.
The new law aims to make cannabis products cheaper for consumers.
Despite the tax break, California remains behind in its battle to combat the illicit market in part because enforcement efforts have been lacking, according to USC Professor Rosalie Liccardo Pacula, an Elizabeth Garrett Endowed Chair in Health Policy, Economics and Law.
“Consumers are price sensitive, and if the illicit store is right next to the legal store, and it has cheaper prices, the legal store has a harder time competing,” Pacula said. “California was slow to dedicate any sort of enforcement resources.”
For some cannabis retailers, such as Chasom Brown, the co-owner of Cannabis House on West 29th Street near USC, the quality and safety of legally sold cannabis is unmatched due to intense testing processes.
According to the Department of Cannabis Control (DCC), all legal cannabis is tested prior to being sold. Products are sent to labs where they are checked for contaminants, such as heavy metals or “foreign material,” and accurately labeled with the amounts of cannabinoids and terpenes. If any of the cannabis does not meet the standards of the DCC, it is destroyed by the distributor.
“Buying legal cannabis, you’re buying very pure cannabis flower or THC,” Brown said. “But in the illicit market, they pump chemicals into the product to make it look better – that you are now lighting and inhaling.”
For USC students using cannabis, resources such as Cannabis at USC, a student-run organization, stress the importance of buying from legal, licensed shops, rather than from unlicensed individuals.
Maddie Kelley, president of Cannabis at USC and a neuroscience major studying the addictive and therapeutic properties of the drug, said those who choose to consume cannabis should rely on the legal market.
“You really don’t know what you’re buying on the illegal market, and that’s the same for any drug, honestly,” Kelley said. “And that’s why I emphasize to people that if you are going to do that, do it the safest way.”
Efforts made by California could lead to fewer illicit dealers within the state, if the government provides more resources to safe, legal cannabis to consumers, Kelley said. In the meantime, USC students have access to regulations and safety resources through the university’s website.